Generally speaking NH judges have broad discretion to determine the value of marital property in a divorce proceeding. In the matter of the divorce of Diana and John Wolters, the NH Supreme Court addressed the issue of when a judge can reduce the value of a property based on the future tax liability the parties may incur when the property is sold.
The Wolters owned some properties that primarily consisted of limited liability corporations. In assessing the value of the properties, the trial judge attempted to account for the potential tax liability that will be incurred when they are sold.
The Supreme Court noted that the trial court always has broad discretion to determine the value of any marital asset. However, the Court then cited the Telgener case that states a trial judge should only consider the tax consequences of a sale if it is certain that the property will be sold. Otherwise, the tax implications are uncertain and merely speculative. The Wolters Court then said that in the instant matter the property did not have to be sold as part of the divorce decree and there was no proof of concrete plans to sell any of the property, thus it was error to consider the tax consequences.
The tax implications of selling property may be relevant to determining the value of that property. This must be considered when negotiating the distribution of a marital estate.
